Commercial Energy Consultants adds natural gas to reverse auction
Year in Review 2013: Southwestern Illinois
Commercial Energy Consultants adds natural gas to reverse auction
Commercial Energy Consultants, LLC added natural gas to its reverse auction program. The St. Louis-based firm had been providing the service for electric for two years, according to Mike Grimes, the company’s president.
The reverse auction is a computerized process whereby customers are able to have suppliers of either electric or natural gas bid on their contract. It costs the customer nothing; it drives down the price to its lowest possible level; and, once the customer locks in the rate, there’s nothing left but to email a contract.
“I tell everybody that, with these reverse auctions, there’s no reason to renew a contract or to originate a contract with a salesman on the phone telling you he has the best deal,” Grimes said. “We put it up for auction at no cost to the customer; let all the suppliers come to a five minute auction and compete in reverse for his business.”
Commercial Energy Consultants manages the reverse auction process through proprietary computer software and, according to Grimes, no one else has it.
Grimes cited an example of an electric customer who was paying 5.4 cents per kilowatt-hour under his current contract. With his contract coming up in June he went to his supplier and asked for a quote on a two year agreement. He was offered 5.7 cents/kilowatt-hour. He came to Commercial Energy Consultants to see if the reverse auction would work for him. CEC organized a reverse auction and included his current supplier. On the day of the auction, Grimes was in Denver but he was on the phone with his client and watching the auction on the computer.
“All the other suppliers start to bid on it. It gets to 5.5 cents, 5.4 cents, 5.3 cents and then his current supplier comes in wanting to keep the account and bids 4.4 cents. I was on the phone with him. I said, ‘did you see that?’ He said, ‘I can’t believe it. He quoted me 5.7 cents.’ I said, ‘Well, there’s the value of the reverse auction.’ In June, when his contract comes up he’ll be paying 4.4 cents for the next two years because of our reverse auction and it didn’t cost him anything. He’ll save in excess of $120,000.”
The reverse auction is available to commercial users for both electricity and natural gas.
Grimes gave another example of a municipality that wanted to reduce its natural gas costs. CEC set up a reverse auction and the winning bid was just above the spot market price and locked in for three years.
“Don’t go on the phone with a salesman who’s trying to make a big commission,” said Grimes. “Don’t go to your current supplier. The only way to do it is through the reverse auction and Commercial Energy Consultants offers it at no cost. It’s a five minute process and, once you hit the button and lock in the price, all that’s left is an email contract that sometimes you can sign right on the computer.”